The Hindu Business Line : Dredging cos upset over exclusion from tonnage tax

THE Budget announcement on the introduction of a tonnage-based tax scheme for the shipping industry along with the withdrawal of the tax benefits accorded under Section 33 AC of the Income-Tax act spells bad news for the domestic dredging firms including the state-run Dredging Corporation of India (DCI).

The reason being that dredgers are excluded from the purview of the tonnage tax scheme along with fishing vessels, factory ships, pleasure crafts, harbour and river ferries and offshore installations.

The scheme also excludes a sea going ship or vessel if the main purpose for which it is used is the provision of goods or services of a kind normally provided on land as well as a qualifying ship that is used as a fishing vessel for a period of more than 30 days during a previous year.

"Dredgers are not qualified for tonnage tax. The Finance Minister has also announced withdrawal of the concessional regime accorded under Section 33 AC. We are back to the corporate tax regime without any choice. This is bad news," a dredging company official said.

Under Section 33 AC, the shipping/dredging companies could transfer an amount equivalent to twice the aggregate of the paid-up share capital, the general reserves and the share premium account into a development rebate account without paying any tax if the amount so set aside is used exclusively for acquiring new ships/dredgers.

The scrapping of Section 33 AC and the non-eligibility for tonnage tax would hit the acquisition plans of dredging firms, the official said.

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